oversight

The Housing Authority of the City of Pittsburgh, Pennsylvania, Did Not Adequately Administer Its Housing Assistance Payments for Leased Housing

Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-09-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                   Isssue Date
                                                                          Septem
                                                                               mber 30, 20088
                                                                   A
                                                                   Audit Report Num
                                                                                  mber
                                                                          2008-PH-1014




TO:        Jamess D. Cassidyy, Director, Office
                                         O      of Pubblic Housingg, Pittsburgh Field Officee,
             3EP
               PH



FROM:      John P.
                P Buck, Reggional Inspector Generall for Audit, Philadelphia
                                                                P          a Regional
            Officce, 3AGA

SUBJEC
     CT:   The Housing
               H       Authhority of thee City of Pittsburgh, Pennnsylvania, Did
                                                                             D Not
            Adeequately Adm
                          minister Its Housing
                                        H         Asssistance Paym
                                                                 ments for Leeased Housinng

                                   HIGH
                                      HLIGHT
                                           TS

 What We
      W Audited
              d and Why

           We au udited the Hoousing Authhority of the City of Pittssburgh’s (Auuthority)
           adminnistration of its housing assistance
                                             a          paayments for leased housing under itss
           Movin ng to Work Demonstrati
                               D             ion program agreement based
                                                                      b     on ourr analysis off
           variouus risk factorrs relating too housing auuthorities adm
                                                                      ministering a leased houssing
           prograam within ouur region. This
                                           T is the firrst of two auudit reports we
                                                                                 w plan to isssue
           on thee Authority’ss program. The T audit obbjective addrressed in thiss report was to
           determ
                mine whetheer the Authorrity properlyy maintainedd documentattion to suppoort
           housinng assistancee payments and  a accurateely calculated them.

 What We
      W Found

           The Authority
                A          didd not properlly maintain documentati
                                                        d            on to supporrt housing
           assistaance paymennts and did not
                                          n always acccurately caalculate houssing assistancce
           paymeents for its leeased housinng. We idenntified deficiencies in 28 of the 30 tenant
           files th
                  hat we revieewed. The Authority
                                         A           didd not maintaiin complete documents
           requirred by the U.S. Departm ment of Housiing and Urbaan Developm    ment (HUD)) and
           its ow
                wn administraative plan, reesulting in unsupported
                                                       u             h
                                                                     housing  assiistance paym
                                                                                             ments
           of $58,470. It also made ineligible housing assistance payments totaling $12,180
           because it did not execute housing assistance payments contracts within 60 days
           of the beginning of the lease term, and it made housing assistance payments
           before the effective date of the related housing assistance payment contract.
           Lastly, the Authority inaccurately calculated housing assistance payments,
           resulting in $4,811 in overpayments and $1,708 in underpayments.

What We Recommend

           We recommend that HUD require the Authority to correct the errors in the tenant
           files identified by the audit, provide documentation to support housing assistance
           payments totaling $58,470 or reimburse its leased housing program for the
           payments that it cannot support, reimburse its leased housing program $16,991 for
           the ineligible payments and overpayments, and reimburse applicable tenants
           $1,708 for the housing assistance underpayments.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.

Auditee’s Response

           We provided our discussion draft audit report to the Authority on July 30, 2008.
           We discussed the report with the Authority during the audit and at an exit
           conference on August 7, 2008. Following the exit conference, we provided an
           updated draft to the Authority on August 14, 2008. The Authority provided
           written comments to our draft report on August 22, 2008. The Authority
           disagreed with some of the conclusions in the report and reimbursement of any
           ineligible costs, but it stated that it has developed and is implementing policies
           and procedures to address the deficiencies that we identified. The complete text
           of the Authority’s response, along with our evaluation of that response, can be
           found in appendix B of this report.




                                            2
                              TABLE OF CONTENTS

Background and Objectives                                                         4

Results of Audit
        Finding: The Authority Did Not Adequately Administer Its Leased Housing   5
        Assistance Payments in Accordance with HUD Requirements

Scope and Methodology                                                             9

Internal Controls                                                                 11

Appendixes
   A.   Schedule of Questioned Costs and Funds to Be Put to Better Use            13
   B.   Auditee Comments and OIG’s Evaluation                                     14
   C.   Criteria                                                                  30
   D.   Results of Tenant File Reviews                                            34
   E.   Housing Assistance Payment Errors                                         35




                                              3
                     BACKGROUND AND OBJECTIVES

The Housing Authority of the City of Pittsburgh (Authority) was established as a public
corporation in 1937 under the Housing Authority Law of the Commonwealth of Pennsylvania to
provide decent, safe, and sanitary housing in the most efficient and economical manner. A
seven-member board of commissioners governs the Authority. The mayor of the City of
Pittsburgh appoints the members of the board. The board appoints an executive director to
administer the affairs of the Authority. The current executive director is A. Fulton Meachem, Jr.
The Authority’s main administrative office is located at 200 Ross Street, Pittsburgh,
Pennsylvania.

In 1996, Congress authorized Moving to Work as a U.S. Department of Housing and Urban
Development (HUD) demonstration program. Congress exempted the participants from many of
the Housing Act of 1937 and associated regulations as outlined in the individual Moving to
Work agreements that HUD established with the program’s participants. In October 1998, the
language in the Departments of Veterans Affairs and Housing and Urban Development and
Independent Agencies Appropriations Act of 1999 (Public Law 105-276, 112 Stat. 2461)
specifically named and authorized the Authority to join the demonstration program. In
November 2000, HUD signed a five-year Moving to Work agreement with the Authority. In
April 2005, HUD agreed to extend the term of the Authority’s Moving to Work agreement for
one year. In December 2006, HUD agreed to extend for three years the term of the Authority’s
Moving to Work agreement. The expiration date of the Authority’s current agreement is
December 31, 2009.

Under the Section 8 Housing Choice Voucher program, the Authority was authorized to provide
leased housing assistance payments to more than 7,000 eligible families. HUD authorized the
Authority the following financial assistance for housing choice vouchers:

                      Authority fiscal year         Annual budget authority
                             2005                        $34,714,733
                             2006                        $35,828,080
                             2007                        $34,991,503
                            Totals                      $105,534,316

Our audit objective was to determine whether the Authority properly maintained documentation
to support housing assistance payments and accurately calculated them.




                                                4
                                RESULTS OF AUDIT

Finding: The Authority Did Not Adequately Administer Its Leased
Housing Assistance Payments in Accordance with HUD Requirements

The Authority did not properly maintain documentation to support housing assistance payments
and did not always accurately calculate housing assistance payments for its leased housing in
compliance with HUD requirements. This condition occurred because the Authority did not
implement quality control procedures to ensure that it followed HUD requirements. As a result,
it was unable to support $58,470 in housing assistance payments and improperly overpaid
$16,991 and underpaid $1,708 in housing assistance.



 The Authority Lacked Proper
 Documentation in Its Tenant
 Files and $58,470 of Payments
 Were Unsupported


              The Authority lacked proper documentation to support housing assistance
              payments totaling $58,470 for the period September 2005 through December
              2007. Our review of 30 tenant files showed that 28 files had at least one of the
              following key documents missing or incomplete:

                  •   27 files did not have fully executed housing assistance payments contracts
                      (signed but not dated by the Authority, the owner, or both),
                  •   18 files did not have a signed and/or dated lease,
                  •   10 files did not have leases executed before the beginning of the lease
                      term,
                  •   Six files did not have a completed request for tenancy approval,
                  •   Five files did not have evidence of an adequate rent reasonableness
                      review,
                  •   Five files either did not have an Authorization for Release of
                      Information/Privacy Act Notice (HUD Form 9886) or the form was
                      incomplete,
                  •   Three files did not have proper income verification,
                  •   Three files either did not have a lead-based paint certification or the
                      certification was not signed by the tenant,
                  •   One file did not have an interim reexamination completed as required, and
                  •   One file did not have a completed criminal background check.

              The files reviewed did not include complete documentation required by HUD and
              were not consistent with the Authority’s administrative plan. Although the

                                               5
                  majority of the deficiencies are in essence documentation issues, there were
                  instances in which incomplete documentation or the lack of documentation was
                  material and resulted in the Authority making unsupported housing assistance
                  payments of $58,470. We conservatively determined that the Authority made
                  unsupported payments of

                      •    $41,258 in 6 of the 27 files in which the housing assistance payment
                           contract was not signed,
                      •    $13,954 in the three files that lacked third party verification of income,
                           and
                      •    $3,258 in three of the five files that had inadequate rent reasonableness
                           reviews.

                  Appendix D of this report shows the detailed results of our tenant file reviews.

    The Authority Made Ineligible
    Housing Assistance Payments



                  The Authority also made ineligible housing assistance payments totaling $12,180
                  in 4 of the 30 tenant files reviewed. It made $10,971 in ineligible payments
                  because it did not execute the housing assistance payments contract within the
                  required period of 60 days from the beginning of the lease term. HUD regulations
                  require the contracts to be executed no later than 60 calendar days from the
                  beginning of the lease term. Any contract executed after the 60 day period is void
                  and the Authority may not pay any housing assistance payment to the owner.
                  This condition occurred in four files that we reviewed. The Authority made
                  another $1,209 in ineligible payments because it made the payments before the
                  effective date of the housing assistance payments contract. HUD regulations
                  prohibit the Authority from making any assistance payment to the owner until the
                  housing assistance payment contract has been executed. This condition occurred
                  in one file1 that we reviewed.

                  Appendix D of this report shows the detailed results of our tenant file reviews.

    The Authority Incorrectly
    Calculated Housing Assistance
    Payments

                  The Authority incorrectly calculated housing assistance payments, resulting in
                  overpayments of $4,811 and underpayments of $1,708 for a total difference of
                  $6,519 for the period September 2005 through December 2007. To determine

1
 One file (tenant 26) had total ineligible costs of $2,015 related to deficiencies with housing assistance payment
contracts ($806) and early payments ($1,209).

                                                          6
             whether the Authority correctly calculated the housing assistance payments, we
             reviewed 59 annual reexaminations from 30 tenant files. The Authority
             incorrectly calculated housing assistance payments in 10 of the 30 tenant files
             reviewed. The Authority made these errors because it did not

                •   Retroactively adjust housing assistance payments based on an increase in
                    tenant income (one file, $3,339 overpayment),
                •   Include child support payments in the income calculations and did not
                    properly calculate other income and wages (one file, $1,140
                    overpayment),
                •   Properly include unemployment compensation and a related dependent
                    allowance in the income calculations (one file, $140 overpayment),
                •   Properly calculate medical assistance (one file, $120 overpayment),
                •   Properly calculate a medical deduction (one file, $72 overpayment), and
                •   Properly calculate medical expense deductions and tenant income (five
                    files, $1,708 underpayments).

             Appendix E of this report shows the housing assistance payment errors that
             resulted from the Authority’s incorrect calculations.

The Authority Needs to
Establish Quality Control and
Compliance Procedures

             Although the problems discussed in this finding occurred mainly because of
             administrative errors made by the Authority’s staff, the Authority’s lack of quality
             control and compliance procedures contributed significantly to this situation. The
             Authority did not perform supervisory quality control reviews to ensure that all
             required documentation was properly maintained in its tenant files and did not
             implement procedures and controls to ensure that it followed HUD requirements.
             The Authority’s administrative plan stated that it was required to perform quality
             control reviews for units under contract. However, the Authority acknowledged
             that it had not performed quality control reviews before September 2007. It stated
             that since September 2007, it had established a quality control and compliance
             program and that it views this component of its operations as a continual process
             that will be updated and enhanced as needs are identified. The Authority
             indicated that it had made changes and implemented some controls and that it
             planned to make additional changes and implement additional controls to improve
             its leased housing program.


Conclusion

             The Authority did not adequately administer its leased housing assistance
             payments. As a result, it disbursed $58,470 in housing assistance payments
             without proper documentation and overpaid $16,991 and underpaid $1,708 in

                                              7
        housing assistance. The Authority needs to implement adequate controls and
        procedures to improve its administration of the program and ensure that it
        complies with HUD requirements and its administrative plan.


Recommendations

           We recommend that the Director of HUD’s Office of Public Housing,
           Pittsburgh field office, direct the Authority to

           1A.    Correct the errors in the tenant files identified by the audit.

           1B.    Provide documentation to support housing assistance payments
                  totaling $58,470 or reimburse its leased housing program from
                  nonfederal funds for the payments that it cannot support.

           1C.    Reimburse its leased housing program $16,991 from nonfederal funds
                  for the ineligible housing assistance payments identified by the audit.

           1D.    Reimburse applicable tenants $1,708 from program funds for the
                  housing assistance underpayments.

           1E.    Improve its controls by implementing procedures to help reduce and/or
                  prevent recurring deficiencies in its payments calculation process,
                  ensure that housing assistance contracts and leases are executed as
                  required, and that assistance payments are made after contracts have
                  been properly executed.

           1F.    Develop and implement policies and procedures for performing quality
                  control reviews of files and documenting the results of those reviews
                  and any actions taken.

           1G.    Develop procedures for employees to adequately maintain all
                  supporting documentation in tenant files.




                                         8
                         SCOPE AND METHODOLOGY

To accomplish our objective, we

   •   Reviewed applicable laws; regulations; the Authority’s administrative plan; HUD’s program
       requirements at 24 CFR [Code of Federal Regulations] Parts 5, 35, and 982; HUD’s Public
       and Indian Housing Notices 2004-01 and 2004-18; and HUD’s Housing Choice Voucher
       Program Guidebook 7420.10G;

   •   Reviewed the Authority’s accounting records; annual audited financial statements for 2003,
       2004, and 2005; check register; tenant files; computerized databases including housing
       assistance payment register and HUD-50058 (Family Report) data; board meeting minutes;
       organizational chart; correspondence; and Moving to Work documents including the
       agreement, plans, and reports; and

   •   Reviewed HUD’s monitoring reports for the Authority.

We also interviewed the Authority’s employees and HUD staff.

To achieve our audit objective, we relied in part on computer-processed data in the Authority’s
database. Although we did not perform a detailed assessment of the reliability of the data, we
did perform a minimal level of testing and found the data to be adequate for our purposes.

We randomly selected files for 20 tenants receiving housing assistance payments during our
audit period from the Authority’s housing assistance payment register. The universe included
6,416 families that were receiving housing assistance payments. Additionally, we selected files
for 10 of 21 new tenants the Authority admitted to the program during the month of August
2007. Therefore, we reviewed 30 tenant files in total. As stated in the audit report, we identified
deficiencies in 28 tenant files that we reviewed and determined that the Authority made
ineligible housing assistance payments totaling $16,991 during the period from September 2005
to December 2007.

We analyzed an automated data file that the Authority provided containing family information
for all persons participating in its leased housing program as of August 2007. The Authority had
6,416 families in its data file. We screened the Social Security numbers for the heads of
household for the 6,416 families against a database provided to us by the Social Security
Administration to determine whether heads of household were deceased. We determined that
106 Social Security numbers for heads of household were associated with a deceased person and
14 had validation issues. We reviewed the tenant files for 10 of the 106, and 2 of the 14. We
identified only minor internal control issues relating to the Authority’s handling of these
situations, and we reported them to the Authority in a separate letter.

We performed our on-site audit work between September 2007 and June 2008 at the Authority’s
office located at 200 Ross Street, Pittsburgh, Pennsylvania. The audit covered the period
September 1, 2005, through August 31, 2007, but was expanded when necessary to include other
periods.
                                                 9
We performed our audit in accordance with generally accepted government auditing standards.




                                             10
                             INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •   Effectiveness and efficiency of operations,
   •   Reliability of financial reporting, and
   •   Compliance with applicable laws and regulations.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.




 Relevant Internal Controls

              We determined the following internal controls were relevant to our objectives:

                  •   Program operations – Policies and procedures that management has
                      implemented to reasonably ensure that a program meets its objectives.

                  •   Validity and reliability of data – Policies and procedures that management
                      has implemented to reasonably ensure that valid and reliable data are
                      obtained, maintained, and fairly disclosed in reports.

                  •   Compliance with laws and regulations – Policies and procedures that
                      management has implemented to reasonably ensure that resource use is
                      consistent with laws and regulations.

                  •   Safeguarding resources – Policies and procedures that management has
                      implemented to reasonably ensure that resources are safeguarded against
                      waste, loss, and misuse.

              We assessed the relevant controls identified above.

              A significant weakness exists if internal controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.




                                               11
Significant Weakness

           Based on our audit, we believe the following item is a significant weakness:

               •   The Authority did not establish and implement adequate controls to ensure
                   that assistance payments were properly supported and the accuracy of
                   housing assistance payments.




                                            12
                                    APPENDIXES

Appendix A

               SCHEDULE OF QUESTIONED COSTS
              AND FUNDS TO BE PUT TO BETTER USE

          Recommendation                                               Funds to be put
              number             Ineligible 1/        Unsupported 2/    to better use 3/
                  1B                                     $58,470
                  1C              $16,991
                  1D                                                       $1,708



1/   Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
     that the auditor believes are not allowable by law; contract; or federal, state, or local
     policies or regulations.

2/   Unsupported costs are those costs charged to a HUD-financed or HUD-insured program
     or activity when we cannot determine eligibility at the time of the audit. Unsupported
     costs require a decision by HUD program officials. This decision, in addition to
     obtaining supporting documentation, might involve a legal interpretation or clarification
     of departmental policies and procedures.

3/   Recommendations that funds be put to better use are estimates of amounts that could be
     used more efficiently if an Office of Inspector General (OIG) recommendation is
     implemented. This includes reductions in outlays, deobligation of funds, withdrawal of
     interest subsidy costs not incurred by implementing recommended improvements,
     avoidance of unnecessary expenditures noted in preaward reviews, and any other savings
     which are specifically identified. The funds to be put to better use in this report represent
     funds that tenants overpaid due to the Authority’s calculation errors.




                                                 13
Appendix B

        AUDITEE COMMENTS AND OIG’S EVALUATION

Ref to OIG Evaluation   Auditee Comments




                         14
Comment 1



Comment 2



Comment 3




Comment 4




Comment 5




            15
Comment 4




Comment 6




Comment 6




Comment 7




            16
Comment 7




Comment 7




Comment 8




            17
Comment 8




Comment 9




Comment 9




            18
Comment 10




Comment 10




Comment 11




Comment 12




             19
Comment 13




Comment 13




Comment 14




             20
Comment 14




Comment 15




Comment 15




Comment 16




             21
Comment 16




Comment 17


Comment 18
Comment 16




             22
23
24
                         OIG Evaluation of Auditee Comments

Comment 1   The conclusions in the audit report are supported by audit work performed in
            accordance with generally accepted government auditing standards and support
            the finding.

Comment 2   The Authority’s response included a report from a consultant hired by the
            Authority to review our audit findings. The consultant’s report was dated June
            11, 2008, but was not furnished to us until two months later, when the Authority
            provided its formal response to our draft report. The consultant’s report was
            based on preliminary findings that we communicated to the Authority as the audit
            progressed. We did not include the consultant’s report because the report
            contained language restricting its use. The Authority’s response incorporated the
            consultant’s analysis and we, in turn, considered the consultant’s analysis in our
            comments to the Authority’s written response. (See Comments 4, 6, 13, 14 and
            15) We also revised the report and appendix D to show that the majority of the
            deficiencies were documentation issues and we conservatively included in our
            calculations of questioned costs only those instances where incomplete
            documentation or the lack of documentation was material.

Comment 3   We revised the report to show that the majority of the deficiencies were
            documentation issues and we conservatively included in our calculations of
            questioned costs only those instances where incomplete documentation or the lack
            of documentation was material.

Comment 4   HUD regulations at 24 CFR [Code of Federal Regulations] 982.305 (c) state that
            the Public Housing Authority must use its best efforts to execute the Housing
            Assistance Payment (HAP) contract before the beginning of the lease term. The
            contract must be executed no later than 60 calendar days from the beginning of
            the lease term. Any HAP contract executed after the 60 day period is void, and
            the Public Housing Authority may not pay any housing assistance payment to the
            owner. As stated in the report, in 27 files, the HAP contract was not dated by the
            Authority, the owner, or both parties. Because dates were missing, we could not
            determine whether the HAP contract was executed within 60 days of the
            beginning of the lease term or not. We considered other documentation in the
            tenant files as well as the Authority’s housing assistance payment register and
            conservatively determined that payments totaling $41,258 were unsupported for
            six tenants. In the six cases, the Authority made payments to the owners for three
            and a half to six times the normal monthly assistance payment amount. This
            gives indication that the contracts were not executed until more than 60 days after
            the beginning of the initial term of the lease. Further, in two of the six cases, date
            stamps on the back of the HAP contracts, documenting receipt by the Authority,
            gave additional indication that the contracts were executed closer to the date of
            the first payment to the owner (20 days and 17 days), rather than the effective date
            of the lease term (134 days and 76 days).



                                             25
            We are encouraged by the Authority’s statement that it is developing and
            implementing quality control procedures to ensure that all HAP contracts are
            dated when signed.

Comment 5   Based on additional analysis that we performed as a result of the exit conference,
            we revised the appendix in the report to show that 27 of the files we reviewed did
            not have a fully executed housing assistance payments contract.

Comment 6   HUD regulations at 24 CFR 982.305 (b) state that the landlord and the tenant
            must always execute the lease before the beginning of the initial term of the lease
            for a unit. Because dates were missing, we could not determine whether the
            leases were executed before the beginning of the lease or not. Regarding tenant
            17, contrary to HUD regulations, the lease was not executed before the beginning
            of the initial term of the lease. The beginning of the initial term of the lease was
            July 16, 2004, and the owner and the tenant signed and dated the lease on July 30,
            2004. Therefore, we revised our results to show that the lease was not signed
            before the term of the lease rather than not being present, signed and dated.
            Regarding tenant 2, contrary to HUD regulations, the lease was not executed
            before the beginning of the initial term of the lease. The beginning of the initial
            term of the lease was December 1, 2004, and the owner and the tenant signed and
            dated the lease on February 21, 2005. Therefore, we revised our results and
            removed the mark indicating that the lease was not present, signed and dated. We
            revised the report to show that this deficiency was a documentation issue.

            We are encouraged by the Authority’s statement that it is developing and
            implementing quality assurance procedures to ensure that all leases are dated
            when signed.

Comment 7   As stated in the audit report, our review of tenant files showed that key documents
            were missing or incomplete. For tenants 23, 26, and 30, the rent comparability
            forms were incomplete and the Authority did not provide any other
            documentation to demonstrate that a rent comparison was conducted and that the
            rent was reasonable for these units. Regarding tenant 7, rent reasonableness
            certifications were in the file for the 2002, 2003 and 2004 rent increases.
            Although the comparability forms supporting the 2002 and 2003 certifications
            were not current, the comparables for the 2004 certification were current. Since
            the most recent certification was acceptable, we removed the results for this
            tenant from the report. We revised our results for tenant 19 because a rent
            reasonableness review was not needed because there was no increase in rent. The
            report now shows that five files lacked evidence of an adequate rent
            reasonableness review.

Comment 8   The Authorization for Release of Information/Privacy Act Notice is a HUD form
            (HUD Form 9886) and it includes space to identify the name of the Public
            Housing Authority requesting the release of information, including the full
            address, name of contact person, and date. As such, the Authority is required to
            accurately and completely fill out the form. The Authority claims that the tenant

                                             26
              and the recipient of the form are made aware of the requestor through a cover
              letter or otherwise, however, we found no evidence in the tenant files reviewed to
              support the Authority’s claim. Further, a cover letter could easily become
              separated from the form and as a result, the recipient would not have any
              information regarding the party requesting the information. We revised the report
              to show these deficiencies as documentation issues.

              We are encouraged by the Authority’s statement that it is developing and
              implementing additional quality assurance procedures to ensure that it will
              completely fill out Authorization for Release of Information/Privacy Act Notices.

Comment 9     The Request for Tenancy Approval is a HUD form (form HUD-52517). HUD’s
              Housing Choice Voucher Program Guidebook, 7420.10G, section 8.7, states that
              Public Housing Authorities must use the form for requesting tenancy approval.
              Further, the Authority’s administrative plan requires that the Request for Tenancy
              Approval be signed by both the tenant and the owner. Our results showed that
              three forms lacked a date and three forms lacked a required signature. We revised
              the report to show these deficiencies as documentation issues.

              We are encouraged by the Authority’s statement that it is developing and
              implementing additional quality assurance procedures to ensure that Requests for
              Tenancy Approval are dated when signed.

Comment 10 HUD regulations at 24 CFR 35.92 addressing lead-based paint require a statement
           by the lessor disclosing the presence of known lead-based paint and /or lead-based
           paint hazards in the housing being leased or indicating no knowledge of the
           presence of lead-based paint and/or lead-based paint hazards. The lessor shall
           also disclose any additional information available concerning the known lead-
           based paint and/or lead-based paint hazards, such as the basis for the
           determination that lead-based paint and/or lead-based paint hazards exist in the
           housing, the location of the lead-based paint and or lead-based paint hazards, and
           the condition of the painted surfaces. The regulation also requires the signatures
           of the lessors, agents, and lessees certifying to the accuracy of their statements to
           the best of their knowledge, along with the dates of signature. The certification is
           intended to protect the assisted families from the hazards associated with lead-
           based paint.

              We are encouraged by the Authority’s statement that it is developing and
              implementing additional procedures to ensure that all tenant files contain lead-
              based paint certifications signed and dated by the tenant, but we point out that the
              Authority needs to ensure that all involved parties sign and date the certifications
              as required.

Comment 11 HUD regulations at 24 CFR 982.158 state that the Public Housing Authority must
           maintain complete and accurate accounts and records for the program in
           accordance with HUD requirements, in a manner that permits a speedy and
           effective audit. The records must be in the form required by HUD, and include

                                               27
              copies of executed leases and HAP contracts, lead-based paint records as required
              by part 35, subpart B of this title, records to document the basis for determining
              rent reasonableness and other records specified by HUD. The Authority did not
              properly maintain documentation to support housing assistance payments in
              accordance with HUD regulations and its own administrative plan. For example,
              as noted in comment 8 above, the Authority’s administrative plan required the
              Request for Tenancy Approval to be signed by both the tenant and owner (see
              Comment 12). Further, the administrative plan reiterates HUD regulations and
              requires the Authority to execute HAP contracts no later than 60 calendar days
              from the beginning of the lease term. Since HAP contracts were frequently not
              dated, the Authority could not demonstrate its compliance with this requirement
              (see Comment 4). As stated in the report, the Authority needs to improve its
              administration of the program.

Comment 12 Ineligible costs are expenditures of HUD funds that are not allowable by law;
           contract; or federal, state or local policies or regulations. As explained in our
           comments that follow, the Authority did not comply with HUD regulations and as
           a result it made ineligible expenditures despite the fact that the tenants met
           eligibility requirements.

Comment 13 Contrary to the Authority’s assertion, for tenant 12, although the lease was signed
           but not dated by the owner, it was signed and dated by the tenant 47 days after the
           beginning of the lease term. For tenant 20, the owner and the tenant signed and
           dated the lease 65 days after the beginning of the lease term. The final report
           correctly shows 10 files had this deficiency. We revised the report to show these
           deficiencies as documentation issues.

              We are encouraged by the Authority’s statement that it is developing and
              implementing additional quality assurance procedures to ensure that all leases are
              signed prior to the beginning of the lease term.

Comment 14 The draft report indicated that in five files, not six, as stated by the Authority, it
           did not execute the HAP contract within 60 days from the beginning of the lease
           term. For tenant 20, although the HAP contract was signed but not dated by the
           Authority, it was signed and dated by the owner 65 days after the beginning of the
           term of the lease term. To be conservative, we revised the results for tenant 14 to
           show that $9,404 are unsupported costs because the date stamp on the back of the
           HAP contract is an indicator and not definitive to demonstrate when the contract
           was executed.

              We are encouraged by the Authority’s statement that it is developing and
              implementing additional quality assurance procedures to ensure that all HAP
              contracts are executed within the required time period.

Comment 15 HUD regulations at 24 CFR 982.305 (c) state that the Public Housing Authority
           may not pay any housing assistance payment to the owner until the HAP contract
           has been executed. However, to be conservative, we revised the report and

                                               28
              removed the results for those tenants for which the payment was processed over a
              weekend.

              We are encouraged by the Authority’s statement that it is developing and
              implementing additional quality assurance procedures to ensure that HAP
              payments are not made before the effective date of the HAP contract.

Comment 16 We revised the report to show that the amount for tenant 8 is $3,339.

              We are encouraged by the Authority’s statement that it is developing and
              implementing additional quality assurance procedures to ensure that HAP and
              utility allowance calculation errors are minimized.

Comment 17 The Authority did not provide an explanation or documentation to support its
           disagreement with our determination that the tenants were underpaid. However,
           we revised the results for tenant 13 from $270 to $450 in the final report because
           the underpayments occurred for at least 10 months rather than the six months
           reported in the draft report.

Comment 18 The correct total of underpayments identified by the audit is $1,708 as revised
           (see Comment 17).




                                              29
Appendix C
                                         CRITERIA

24 CFR [Code of Federal Regulations] 5.901

(a) General criminal records searches. This subpart applies to criminal conviction background
checks by public housing authorities that administer the Section 8 and public housing programs
when they obtain criminal conviction records, under the authority of section 6(q) of the 1937 Act
(42 U.S.C. [United States Code] 1437d(q)), from a law enforcement agency to prevent admission
of criminals to public housing and Section 8 housing and to assist in lease enforcement and
eviction.

24 CFR [Code of Federal Regulations] 35.92

(b)(1) A Lead Warning Statement with the following language: Housing built before 1978 may
contain lead-based paint. Lead from paint, paint chips, and dust can pose health hazards if not
managed properly. Lead exposure is especially harmful to young children and pregnant women.
Before renting pre-1978 housing, lessors must disclose the presence of lead-based paint and/or
lead-based paint hazards in the dwelling.
(2) A statement by the lessor disclosing the presence of known lead-based paint and/or lead-
based paint hazards in the target housing being leased or indicating no knowledge of the
presence of lead-based paint and/or lead-based paint hazards. The lessor shall also disclose any
additional information available concerning the known lead-based paint and/or lead-based paint
hazards, such as the basis for the determination that lead-based paint and/or lead-based paint
hazards exist in the housing, the location of the lead-based paint and/or lead-based paint hazards,
and the condition of the painted surfaces.
(3) A list of any records or reports available to the lessor pertaining to lead-based paint and/or
lead-based paint hazards in the housing that have been provided to the lessee. If no such records
or reports are available, the lessor shall so indicate.
(4) A statement by the lessee affirming receipt of the information set out in paragraphs (b)(2) and
(b)(3) of this section and the lead hazard information pamphlet required under 15 U.S.C. 2696.
(5) When any agent is involved in the transaction to lease target housing on behalf of the lessor,
a statement that:
(i) The agent has informed the lessor of the lessor’s obligations under 42 U.S.C. 4852d; and
(ii) The agent is aware of his/her duty to ensure compliance with the requirements of this
subpart.
(6) The signatures of the lessors, agents, and lessees certifying to the accuracy of their statements
to the best of their knowledge, along with the dates of signature.
(c) Retention of certification and acknowledgment information.
(1) The seller, and any agent, shall retain a copy of the completed attachment required under
paragraph (a) of this section for no less than 3 years from the completion date of the sale. The
lessor, and any agent, shall retain a copy of the completed attachment or lease contract
containing the information required under paragraph (b) of this section for no less than 3 years
from the commencement of the leasing period.


                                                 30
(2) This recordkeeping requirement is not intended to place any limitations on civil suits under
the Act, or to otherwise affect a lessee’s or purchaser’s rights under the civil penalty provisions
of 42 U.S.C. 4852d(b)(3).
(d) The seller, lessor, or agent shall not be responsible for the failure of a purchaser’s or lessee’s
legal representative (where such representative receives all compensation from the purchaser or
lessee) to transmit disclosure materials to the purchaser or lessee, provided that all required
parties have completed and signed the necessary certification and acknowledgment language
required under paragraphs (a) and (b) of this section.

24 CFR [Code of Federal Regulations] 982.158, Program Accounts and Records

(a) The Public Housing Authority must maintain complete and accurate accounts and other
records for the program in accordance with HUD requirements, in a manner that permits a
speedy and effective audit. The records must be in the form required by HUD, including
requirements governing computerized or electronic forms of record-keeping. The Public
Housing Authority must comply with the financial reporting requirements in Code of Federal
Regulations 24 part 5, subpart H.
(e) During the term of each assisted lease, and for at least three years thereafter, the Public
Housing Authority must keep:
   (1) A copy of the executed lease;
   (2) The Housing Assistance Payment contract; and
   (3) The application from the family.
(f) The Public Housing Authority must keep the following records for at least three years:
   (1) Records that provide income, racial, ethnic, gender, and disability status data on program
applicants and participants;
   (4) Unit inspection reports;
   (5) Lead-based paint records as required by part 35, subpart B of this title.
   (7) Records to document the basis for Public Housing Authority determination that rent to
owner is a reasonable rent (initially and during the term of a Housing Assistance Payment
contract); and
   (8) Other records specified by HUD.

24 CFR [Code of Federal Regulations] 982.305, Public Housing Authority Approval of
Assisted Tenancy

(b) Actions before lease term.
    (1) All of the following must always be completed before the beginning of the initial term of
    the lease for a unit:
        (ii) The landlord and the tenant have executed the lease (including the HUD-prescribed
        tenancy addendum, and the lead-based paint disclosure information as required in
        35.92(b) of this title).
(c) When Housing Assistance Payment contract is executed.
    (2) The Public Housing Authority may not pay any housing assistance payment to the owner
    until the Housing Assistance Payment contract has been executed.
    (4) Any Housing Assistance Payment contract executed after the 60 day period is void, and
    the Public Housing Authority may not pay any housing assistance payment to the owner.


                                                  31
24 CFR [Code of Federal Regulations] 982.311, When Assistance Is Paid

(a) Payments under HAP [housing assistance payments] contract. Housing assistance payments
are paid to the owner in accordance with the terms of the HAP contract. Housing assistance
payments may only be paid to the owner during the lease term, and while the family is residing
in the unit.

24 CFR [Code of Federal Regulations] 982.507, Rent to Owner: Reasonable Rent

(a) Public Housing Authority Determination.
    (1) The Public Housing Authority may not approve a lease until the Public Housing
    Authority determines that the initial rent to owner is a reasonable rent.
    (2) The Public Housing Authority must re-determine the reasonable rent:
        (i) Before any increase in the rent to owner;
    (4) At all times during the assisted tenancy, the rent to owner may not exceed the reasonable
    rent as most recently determined or redetermined by the Public Housing Authority.

24 CFR [Code of Federal Regulations] 982.516, Family Income and Composition: Regular
and Interim Examinations

(a) Public Housing Authority responsibility for reexamination and verification.
    (1) The Public Housing Authority must conduct a reexamination of family income and
    composition at least annually.
    (2) The Public Housing Authority must obtain and document in the tenant file third party
    verification of the following factors, or must document in the tenant file why third party
    verification was not available:
        (i) Reported family annual income;
        (ii) The value of assets;
        (iii) Expenses related to deductions from annual income; and
        (iv) Other factors that affect the determination of adjusted income.
(g) Execution of release and consent.
    (1) As a condition of admission to or continued assistance under the program, the Public
    Housing Authority shall require the family head, and such other family members as the
    Public Housing Authority designates, to execute a HUD-approved release and consent form
    (including any release and consent as required under Sec. 5.230 of this title) authorizing any
    depository or private source of income, or any Federal, State or local agency, to furnish or
    release to the Public Housing Authority or HUD such information as the Public Housing
    Authority or HUD determines to be necessary.
    (2) The Public Housing Authority and HUD must limit the use or disclosure of information
    obtained from a family or from another source pursuant to this release and consent to
    purposes directly in connection with administration of the program.

HUD’s Section 8 Housing Choice Voucher Program Guidebook, 7420.10G, Chapter 5,
Section 5.2, Eligibility Requirements

There are four factors which affect eligibility:


                                                   32
   •   Family definition. Only applicants who meet a PHA’s [public housing agency] definition
       of family are eligible.
   •   Income limits. The household’s annual income may not exceed the applicable income
       limit as established by HUD.
   •   Citizenship status. The applicant must meet the documentation requirements of
       citizenship or eligible immigration status.
   •   Eviction for drug-related criminal activity. Persons evicted from public housing or any
       Section 8 program for drug-related criminal activity are ineligible for assistance for at
       least three years from the date of the eviction.

The PHA’s administrative plan must contain procedures for determining eligibility and denial of
assistance.

Citizenship Status

Limits on Assistance to Non-Citizens

Eligibility for federal housing assistance is limited to U.S. citizens and applicants who have
eligible immigration status. Eligible immigrants are persons who qualify for one of the
immigrant categories in Table 5-1. Persons claiming eligible immigration status must present
appropriate immigration documents, which must be verified by the PHA through the
Immigration and Naturalization Service (INS).

Every applicant household for (and participant in) the housing choice voucher program must sign
a certification for every household member either claiming status as:

   •   A U.S. citizen, or
   •   An eligible alien, or
   •   Stating the individual’s choice not to claim eligible status and acknowledge ineligibility.

The Housing Authority of the City of Pittsburgh’s Housing Choice Voucher Program
Administrative Plan

The Authority’s Section 8 administrative plan establishes its policies and procedures used to
administer the Section 8 Housing Choice Voucher program in accordance with HUD
requirements.




                                                33
Appendix D

                                            RESULTS OF TENANT FILE REVIEWS



                                     HAP contract present,




                                                                                                                                                    (Authorization for the
                                                                                      contract was executed
                                                             Lease present, signed,
               Criminal background




                                                                                                                                                    Information/ Privacy
                                     third- party evidence




                                                                                      HAP paid after HAP




                                                                                                                                                                                                    assistance payments∗
                                                                                                              Rent reasonableness
                                                             the term of the lease




                                                                                                                                                                             Request for tenancy
                                                             Lease signed before




                                                                                                                                                                                                                           Housing assistance
                                                             executed within 60
                                     Income verified to




                                                                                                                                                                                                    Ineligible housing
                                     signed, and dated




                                                                                                                                                    HUD Form 9886
                                                             days of the lease
                                     reexaminations




                                                                                                              determinations
                                                             HAP contract




                                                                                                                                                                                                                           payments not
                                                                                                                                    Lead- based
                                                                                                                                    certification




                                                                                                                                                    Act Notice)




                                                                                                                                                                                                                           supported*
                                                                                                                                                    Release of
                                                             and dated




                                                                                                                                                                             approval
                                     Interim
      Tenant


               checks




      1                                              X                                                             X                                                                                                          $6,860
      2                                              X                         X                                                                                                  X
      3                                              X        X
      4                                       X      X        X                                                                                                                                                               $6,325
      5                                              X                                                             X                                                                                                              $408
      6                                              X        X                                                                                                                   X
      8                                             XX       XX
      9             X                                X        X                                                                        X
     10                                              X        X
     11                                             XX        X                X
     12                                              X        X               X                                                                                                   X
     13                                             XX               XX       XX                                                                                                                      $6,655
     14                                              X        X                                                                                                                                                               $9,404
     15                                             XX                        X                                                                                                                                               $1,638
     16                                              X                        X                                                                                                                                               $8,241
     17                               X              X                        X                                                                                                                                               $9,954
     18                                             XX                X      XX                                                                              X                                        $2,262
     19                                             XX        X               X
     20                                             XX        X       X       X                                                        X                                                              $1,248                  $8,790
     21                                                                                                                                                      X
     22                               X              X        X                                                                        X                     X                    X                                           $1,985
     23                                              X        X                                                    X                                         X                    X                                           $1,815
     24                                              X        X                                                                                              X
     25                                              X        X
     26                                              X        X       X                     X                      X                                                                                  $2,015
     28                                              X
     29                               X              X        X                                                                                                                                                               $2,015
     30                                              X        X                                                     X                                                             X                                           $1,035

    Totals           1                 3      1      27       18       4      10             1                      5                   3                    5                     6               $12,180 $58,470

NOTE: An "X" identifies a deficiency in the file. More than one “X” represents multiple occurrences of the deficiency.




*
    To avoid double counting, we did not report questioned costs both as ineligible payments and unsupported costs.

                                                                                      34
Appendix E

         HOUSING ASSISTANCE PAYMENT ERRORS


                             Utility
                           allowance
                Over-         over-       Under-                      Total
    Tenant    payments     payments      payments     Total over-    under-
    number   to landlord   to tenant    to landlord   payments      payments
      01                                       $645                      $645
      03             $20        $120                         $140
      08          $3,339                                   $3,339
      11          $1,140                                   $1,140
      12                                      $128                       $128
      13                                      $450                       $450
      14            $72                                      $72
      20           $120                                     $120
      22                                       $40                        $40
      30                                      $445                       $445

    Totals        $4,691        $120        $1,708         $4,811      $1,708




                                       35